Wednesday, 13 May, 2015

Treasuries Rise, Dollar Falls as Retail Sales Miss; Stocks Gain

(Bloomberg) — Treasuries rose and the dollar fell after retail sales missed forecasts, adding to concern economic growth is slowing. U.S. stocks rose amid deal activity, while European equities gained as a bond selloff abated and the region’s growth picked up. The Standard & Poor’s 500 Index rose 0.4 percent at 9:30 a.m. in New York after two days of declines. The yield on 10-year Treasury notes slid three basis points to 2.22 percent, extending a slide after Tuesday touching a five-month high. The Bloomberg Dollar Spot Index lost 0.7 percent. The Stoxx Europe 600 Index added 0.3 percent, while German 10-year bund rates advanced for only the second time in 13 sessions. Sales at U.S. retailers were little changed in April, starting the second quarter on a weak note after economic growth slowed in the first three months of the year. Debt sales in Italy and Germany added to signs a selloff that wiped more than $400 billion off the value of fixed-income markets may be abating. Euro-area growth quickened in the first quarter amid a weakened currency and European Central Bank stimulus. “On the European side we have had some good numbers and on the other side people have been disappointed in the performance of U.S. data,” said Sonja Marten, a currency strategist at DZ Bank AG in Frankfurt. The dour tone of the retail report comes as the Federal Reserve considers its first interest-rate increase since 2006. The S&P 500 fell for the past two days after jumping the most since March on Friday amid data that showed hiring bounced back in April from a winter slowdown. Deal News Merger activity boosted U.S. equities Wednesday, as Williams Cos. agreed to buy the 40 percent of Williams Partners LP it doesn’t already own for $13.8 billion, simplifying its corporate structure. Danaher Corp. will purchase water-systems maker Pall Corp. for $13.8 billion and said it will split itself into two publicly traded companies. The yield on the benchmark 10-year note dropped before the U.S. sells $24 billion of the securities at an auction Wednesday. The yield touched 2.36 percent Tuesday, the highest since Nov. 14, and up from as low as 1.80 percent in April. The gains in fixed-income interrupted a monthlong selloff. German bunds were at the epicenter of the rout, as the yield climbed as high as 0.78 percent on May 7, from a record low 0.049 percent on April 17. All 19 industry groups in the Stoxx 600 rose. France’s CAC 40 Index gained 1.4 percent, after growth in the country topped estimates. Italy’s FTSE MIB Index advanced 1.2 percent, while Germany’s DAX Index climbed 0.8 percent. Stocks gained as companies including Vivendi SA and SABMiller Plc reported earnings that beat analysts’ estimates. Overweight Europe “European companies are starting to benefit from a lower euro,” said Christian Zogg, who manages the equivalent of about $10 billion at LLB Asset Management AG in Vaduz, Liechtenstein. “I would recommend being overweight Europe stocks. Don’t fight against the ECB.” UBS AG lost 1.6 percent. The U.S. Justice Department will rip up its agreement not to prosecute the Swiss lender for rigging benchmark interest rates, a person familiar with the matter said. The MSCI Emerging Markets Index rose 0.8 percent as benchmark gauges in Russia, India, Indonesia, South Africa, South Korea and Thailand gained at least 0.6 percent. The Shanghai Composite Index dropped 0.7 percent. The gauge had rallied 6.8 percent in the past three days, the best three-day performance since January, fueled by the central bank’s third interest-rate cut in six months. West Texas Intermediate jumped 0.9 percent to $61.29 a barrel, headed for its highest close since Dec. 9. Brent oil rose 0.7 percent to $67.33. Crude inventories fell by 2 million barrels through May 8 for a second weekly drop, the industry-funded American Petroleum Institute was said to have reported. A decline of 250,000 barrels is projected in a Bloomberg survey before government data Wednesday. OPEC raised its 2015 consumption estimate in a monthly report Tuesday. Disclaimer The information contained in this communication from the sender is confidential. It is intended solely for use by the recipient and others authorized to receive it. If you are not the recipient, you are hereby notified that any disclosure, copying, distribution or taking action in relation of the contents of this information is strictly prohibited and may be unlawful. This email has been scanned for viruses and malware, and may have been automatically archived by Mimecast Ltd, an innovator in Software as a Service (SaaS) for business. Providing a safer and more useful place for your human generated data. Specializing in; Security, archiving and compliance. To find out more visit the Mimecast website.